APT to order ships if granted Title XI guarantee

Wednesday, October 24, 2012

American Petroleum Tankers (APT) said this week it will build two new tankers at the National Steel and Shipbuilding Co. (NASSCO) shipyard in San Diego, but said it's commitment to build the ships is contingent on approval of a $340 million Title XI loan guarantee from the U.S. Maritime Administration that would be used to refinance APT’s existing five tankers.
APT, which is majority owned by funds managed by the investment company Blackstone, said these would be the first new product tankers ordered in the United States in two years.
APT applied for a Title XI loan guarantee in 2010 for the five ships that were built between 2006 and 2010.
In July, the company went to U.S. District Court to ask a federal judge to order MarAd to make a decision on whether to grant the guarantee. MarAd turned down the request in August, but said it would further consider the application if additional information was provided. APT has provided additional information and in a joint court filing dated Oct. 5. Lawyers for both APT and MarAd said they anticipate a decision from Marad on the Title XI loan guarantee will be made on or before Oct. 29.
Robert Kurz, APT's chief executive officer, said an order with NASSCO would be “a demonstration of our long-term commitment to the U.S. maritime industry and to bolstering job creation in the U.S. It is a win-win for the Maritime Administration and our company, and we are committed to working with the Maritime Administration and the Department of Transportation to close this financing and support our nation’s important maritime industry.”
In an interview with American Shipper this summer, Kurz contended APT's Title XI application was one of the strongest ever submitted to MarAd.
APT said the agency “has refused to act on APT’s application, based, not on the merits of the application, but primarily on the fact that APT is owned by investment funds.”
Kurz said that was a mistake and might have broad implications, as it might discourage private equity from investing in shipping. He added it's an industry “starved for capital.” - Chris Dupin